2018 (9) TMI 950 - AT - Income Tax

Disallowing the claim of TDS where the income against which was offered to tax in financial year 2008-09 - Held that - Hon ble High Court of Punjab & Haryana in CIT Vs. Abbott Agency (2013 (10) TMI 1173 - PUNJAB AND HARYANA HIGH COURT) while interpreting provisions of the Act held that where the payee had shown the amounts received in its accounts books for the relevant assessment years and where the said payee proves that TDS certificate, issued late, pertained to receipts reflected in the accounts books of earlier years, then the assessee is entitled to claim the benefit of tax deducted at source in the succeeding year, where the TDS certificates were issued late. Applying the said principle to the facts of the present case, we hold that the assessee having offered the income in assessment year 2009-10, is entitled to claim the benefit of tax deducted at source out of such receipts in assessment year 2010-11, since the TDS amount was booked by the deductor in the said year and not in the preceding year. Accordingly, we direct the Assessing Officer to allow the benefit to the assessee. - Decided in favour of assessee Addition of an amount received as advance - assessee having booked the receipts in the succeeding years, can the same amount be added in the hands of assessee - Held that - The assessee had claimed that it had received sum of ₹ 9,73,000/- as advance from Spicer India Ltd, which was kept as advance and the same was offered to tax in assessment year 2011-12. TDS was deducted out of such amount but the assessee had not claimed the benefit of TDS either in assessment year 2010-11 or 2011-12. The sale bills have been booked in assessment year 2011-12 and the assessee has also filed on record the copy of account of Spicer India Ltd. for the year under appeal and the same very clearly reflects that the receipts from the said parties. Where the assessee not even has claimed the benefit of TDS for the year under consideration, there is no merit in the orders of authorities below in treating the advance received against the project by the assessee from M/s. Spicer India Ltd., as receipt of the current year. Reversing the order of CIT(A), we delete the addition - Assessee appeal allowed.

Summary

Issues:
1. Disallowance of TDS claim for income offered in a previous financial year.
2. Treatment of advance received as income in the current year.

Issue 1: Disallowance of TDS Claim for Previous Year's Income:
The appellant contested the disallowance of the TDS claim by the authorities, arguing that the TDS claimed was disallowed for the year under consideration, even though the income was offered in the financial year 2008-09. The Assessing Officer added a sum of &8377; 73,69,030 due to discrepancies in the ITS data, particularly with Gabriel India Ltd. and Spicer India Ltd. The appellant provided reconciliation and explanations, but the Assessing Officer rejected them. The CIT(A) confirmed the disallowance, stating that since the appellant did not offer any income corresponding to the TDS in the assessment year 2010-11, the claim was not allowed. The appellant, however, argued that TDS credit was not taken in the previous year due to technical issues, and therefore, should be allowed in the current year. The ITAT held in favor of the appellant, citing Section 199 of the Income Tax Act and a precedent from the Punjab & Haryana High Court, allowing the benefit of TDS in the succeeding year where TDS certificates were issued late.

Issue 2: Treatment of Advance Received as Current Year's Income:
Regarding the advance received from Spicer India Ltd., the Assessing Officer treated it as income of the current year. The appellant clarified that the advance was received against a project and was offered to tax in the subsequent year. The TDS was deducted on this amount, but the appellant did not claim the benefit in the relevant years. The ITAT observed that the receipts were booked in the subsequent year, and the advance should not be considered as income of the current year. The ITAT overturned the CIT(A)'s decision and deleted the addition of &8377; 9,73,000. Thus, the appellant's appeal on this issue was allowed.

In conclusion, the ITAT ruled in favor of the appellant on both issues, allowing the TDS claim for the previous year's income and rejecting the treatment of advance received as income of the current year. The judgment emphasized adherence to the provisions of the Income Tax Act and relevant rules, ensuring that tax benefits are correctly applied based on the timing of income recognition and TDS deductions.